Employer Mandate Delay Means Trouble For Providers
By Greg Bengel, contributing writer
With the employer mandate requirement being delayed until 2015, providers face both reimbursement cuts and fewer patients
On July 2, the Obama administration delayed the Affordable Care Act’s employer mandate until 2015, giving employers a one-year reprieve from the requirement that they offer health insurance or be penalized. According to The Business Journals, small business owners had been flooding the Obama administration with complaints that the rules of the mandate were too complex, and they needed more time to comply with them. Similarly, Bloomberg quotes Randy Johnson, senior VP at the U.S. Chamber of Commerce, as saying “employers need more time and clarification of the rules of the road before implementing the employer mandate.” With implementation now postponed a year, many employers are breathing a sigh of relief.
Healthcare providers, on the other hand, are decidedly unhappy with the delay and the Orlando Business Journal makes clear why. According to the article, the delay hits healthcare providers with a proverbial double-whammy. Hospitals and providers are already facing cuts in reimbursement due to health reforms that have taken effect. Providers were counting on the employer mandate to help offset these cuts by providing them with more insured patients. Now, with the cuts in reimbursements already in effect, providers will have to wait at least another year for the expected influx of newly-insured patients.
The article quotes Michael Carroll, an analyst with Tribrook Health Care Consultants Inc. in Tampa, FL, on his fears for Florida hospitals. “The administration’s announcement yesterday combined with the Florida House blocking Medicaid expansion this session, likely will result in hospitals continuing to experience increasing levels of uncompensated care (charity care and bad debts) while disproportionate share payments, intended to compensate for uncompensated care are being reduced, albeit at modest rate in the early years of the Affordable Care Act implementation.”
Carroll’s concerns echo nationwide. CNN reported that the day after the delay was announced, healthcare-related stocks dropped. Investors, who had been betting that providers were going to benefit from the employer mandate, took those bets off the table.
An article about the delay published on modernhealthcare.com (subscription required) briefly touches on yet another troubling consequence for providers. The delay, it reports, could prompt more people to enroll in health exchanges with higher deductibles and cost-sharing. And the problem with that? When patients are responsible for more of the bill, hospitals see upticks in uncompensated care and revenue cycle problems.